Investor Presentaiton

• Pros: Single PBM Potential decrease in capitation costs Increased transparency: Allows the state to set contract parameters and would streamline monitoring efforts Flexibility in pharmacy provider reimbursements Uniform formulary and coverage criteria Leverages economies of scale Potential to preserve 340B pharmacy revenues, depending on structure • Cons: Single PBM Potential opposition from health plans Potential decreases in efficiency at the health plan level, due to multiple lines of business Potential loss of provider tax revenue A PBM reverse auction is an online, competitive bidding process states can use to select a PBM to manage prescription drug benefits. An auction starts with an opening bid and PBMs submit lower counteroffers during multiple rounds of bidding. States achieve savings by forcing PBMs to offer the same contract terms but at a lower price than their competitors. Reverse auctions have been known to generate significant savings in various governmental procurements. New Jersey used a reverse auction to select PBMs for public employee health plans and estimates the state will save $2.5 billion in drug spending between 2017 and 2022.29 While reverse auctions can lower costs for states, bid costs should not be the only factor to consider. There is a risk PBMs might push cost savings to the pharmacy level, which could result in low or unfair pharmacy reimbursements and ultimately exacerbate pharmacy access issues. OHA staff reported several other risks relating to these types of procurements. For a reverse auction to be successful it is essential that all requirements be clearly defined and communicated. Any contract OHA considers should include pharmacy protections to ensure adequate pharmacy access is available to all Medicaid patients. • Pros: Reverse auction Potential cost savings Leverages free market competition Ability to define contract requirements bidders must meet Cons: Reverse auction • Less flexible and additional costs may be incurred with change orders Provider uncertainty between contract terms Upfront procurement costs In recent reports, the Prescription Drug Affordability Board and the Prescription Drug Price Transparency Program mention centralized prescription drug purchasing programs. A centralized prescription drug purchasing program would allow Oregon to privatize, standardize, and condense drug programs currently run by multiple state insurers to improve cost-effectiveness while retaining oversight, control, and accountability. This would also increase buying power by aggregating the covered lives of those insurers and programs. A few states currently have designated agencies that coordinate the purchase of drugs for state-run facilities and programs. Programs in Washington and Louisiana purchase drugs related to certain conditions like hepatitis C. Massachusetts's program administers pharmacy services for corrections, 29 See the National Academy for State Health Policy's article on PBM reverse auctions. Oregon Secretary of State | Report 2023-25 | August 2023 | page 27

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